Topic: How To Invest

Hi Pat: Can you give me an opinion on Inter Pipeline Fund and their prospects for a distribution cut come January 2011? Thanks.

Article Excerpt

Inter Pipeline Fund, $13.67, symbol IPL.UN on Toronto (Units outstanding: 256.9 million; Market cap: $3.5 billion), transports, stores, markets and processes oil and natural gas. The fund has three divisions: pipelines (conventional and oil sands), extraction (natural gas liquids from natural gas) and storage (under the Simon Storage and TLG banners). In the three months ended June 30, 2010, Inter Pipeline’s revenue rose 22.4%, to $241.4 million from $197.3 million. Cash flow per unit rose 13.3%, to $0.34 from $0.30. The fund paid out 65% of its cash flow as distributions in the latest quarter. Inter Pipeline Fund’s outlook generally rises and falls with oil prices. Lower oil prices cut drilling activity and production levels, and encourage producers to close or abandon producing wells. That lowers the amount of oil and gas that Inter Pipeline Fund handles, and cuts its revenue. Inter Pipeline Fund’s concentration in Alberta also adds risk. However, the addition of its Corridor Pipeline expansion should add to…